Correlation Between Fidelity Municipal and Fidelity Limited
Can any of the company-specific risk be diversified away by investing in both Fidelity Municipal and Fidelity Limited at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Fidelity Municipal and Fidelity Limited into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity Municipal Income and Fidelity Limited Term, you can compare the effects of market volatilities on Fidelity Municipal and Fidelity Limited and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Fidelity Municipal with a short position of Fidelity Limited. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Municipal and Fidelity Limited.
Diversification Opportunities for Fidelity Municipal and Fidelity Limited
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Fidelity and Fidelity is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Municipal Income and Fidelity Limited Term in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Limited Term and Fidelity Municipal is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Fidelity Municipal Income are associated (or correlated) with Fidelity Limited. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Limited Term has no effect on the direction of Fidelity Municipal i.e., Fidelity Municipal and Fidelity Limited go up and down completely randomly.
Pair Corralation between Fidelity Municipal and Fidelity Limited
Assuming the 90 days horizon Fidelity Municipal Income is expected to generate 2.12 times more return on investment than Fidelity Limited. However, Fidelity Municipal is 2.12 times more volatile than Fidelity Limited Term. It trades about 0.12 of its potential returns per unit of risk. Fidelity Limited Term is currently generating about 0.21 per unit of risk. If you would invest 1,189 in Fidelity Municipal Income on August 24, 2024 and sell it today you would earn a total of 41.00 from holding Fidelity Municipal Income or generate 3.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity Municipal Income vs. Fidelity Limited Term
Performance |
| Timeline |
| Fidelity Municipal Income |
| Fidelity Limited Term |
Fidelity Municipal and Fidelity Limited Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Municipal and Fidelity Limited
The main advantage of trading using opposite Fidelity Municipal and Fidelity Limited positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Municipal position performs unexpectedly, Fidelity Limited can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Fidelity Limited will offset losses from the drop in Fidelity Limited's long position.| Fidelity Municipal vs. Fidelity Tax Free Bond | Fidelity Municipal vs. Fidelity Intermediate Municipal | Fidelity Municipal vs. Fidelity Limited Term | Fidelity Municipal vs. Fidelity Gnma Fund |
| Fidelity Limited vs. Vanguard Intermediate Term Tax Exempt | Fidelity Limited vs. Vanguard Long Term Tax Exempt | Fidelity Limited vs. Vanguard High Yield Tax Exempt |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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